What are IHG points worth?

10

IHG recently updated their rewards program and credit cards in positive ways.  Now, more than ever, I expect that many readers are considering earning IHG points through credit card spend (so as to also earn top tier elite status), and through stays.  That makes it more important than ever to understand the value of those points.  That’s what this post is for.  For other recent posts about IHG, see:

Methodology

In order to determine the value of IHG points, I collected real-world cash prices and point prices.  As I’ve done previously, I examined a number of major hotel markets in the U.S.: Chicago, Denver, Los Angeles, Hawaii, Las Vegas, Miami, New York City, Orlando, and Seattle. Within each market, I identified the first three search results with a guest rating of 4.1 or better, and I recorded both cash and award prices for three dates each: a weekday, a weekend, and a holiday weekend.

  • Why U.S. only? U.S. consumers are known to spend most of their points and miles on domestic travel.  Since the majority of this blog’s audience resides in the U.S. we opted for a U.S. centric view of point values.
  • Why Guest Ratings? The goal wasn’t to find the 3 best hotels in each market. Instead, the goal was to find 3 points bookable hotels that are very popular.  Which ones are people really likely to book?  By using a combination of default sorting and by picking only highly rated hotels, I think it’s reasonable to assume that many members would pick these hotels.
  • Which paid rates were selected?  I always picked the best refundable paid rate shown on the hotel’s website, but without applying any discounts like AAA, military, government, etc.  In most cases, I selected the hotel’s member rate.
  • What about point earnings on paid rates? An ideal analysis may include the value of point earnings on paid rates.  For simplicity, this was not considered in this analysis.  This decision has the effect of over-valuing points.  See the section on Overvaluing vs. Undervaluing Points for more details.
  • What about taxes and fees? For simplicity, taxes and other fees are not included in this analysis.  This decision has the effect of under-valuing points.  See the section on Overvaluing vs. Undervaluing Points for more details.
  • Which specific dates did I use?  
    • Weekday: Wednesday Nov 16, 2022
    • Weekend Day: Friday Nov 18, 2022.
    • Holiday Weekend Day: Saturday Nov 26, 2022 (Thanksgiving Weekend).

Results

Point Value

Analysis Date: 4/16/22 4/9/21 4/4/21 6/2020
Point Value (Median) 0.59 0.64 0.43 0.64
Point Value (Mean) 0.60 0.58 0.54 0.67
Cash Price (Median) $253 $238 $238 $213
Cash Price (Mean) $281 $233 $237 $229
Award Price (Median) 43,000 40,000 47,000 35,000
Award Price (Mean) 46,857 45,286 48,952 34,603
Minimum Point Value 0.39 0.28 0.28 0.40
Maximum Point Value 1.11 0.98 0.98 1.29

The median observed point value was 0.59 cents per point and the mean was 0.60.  With the median and mean so close together and since our previous Reasonable Redemption Value (RRV) for IHG points was 0.60 cents per point, we’ll keep the RRV the same as before 0.60.  As you can see in the chart above, the average value per point barely changed from a year ago, but the min and max point values rose slightly.

Pick your own point value

Analysis Date: 4/16/22 4/9/21 4/4/21 6/2020
50th Percentile (Median) 0.59 0.58 0.43 0.67
60th Percentile 0.61 0.66 0.62 0.70
70th Percentile 0.62 0.68 0.68 0.73
80th Percentile 0.63 0.75 0.71 0.76
90th Percentile 0.65 0.80 0.80 0.86

When we publish Reasonable Redemption Values of points (RRVs), we conservatively pick the middle value, or the 50th percentile.  The idea is that just by randomly picking hotels to use your points, you have a 50/50 chance of getting this value or better.  But what if you cherry-pick awards?  With some other hotel programs, the 80th percentile cents per point is much higher than the median.  And this used to be true with IHG too, but in my latest analysis I found that the 80th or even 90th percentile was only slightly higher than the median.  To be clear, there are cases where you can get better than 0.65 cents per point value, but the chance of stumbling upon that higher value is surprisingly low.

To me, this analysis shows that even those who cherry-pick good value awards can’t count on regularly getting much more than 0.6 cents per point value with properties within the U.S.  That’s unfortunate.

New Reasonable Redemption Value: 0.6

Our Reasonable Redemption Value (RRV) for IHG points was previously set to 0.6 cents per point and there’s nothing in the latest analysis to lead me to change that valuation.  RRV’s are intended to be the point at which it is reasonable to get that much value or better for your points.  In this case, it’s not necessarily easy to get much more value, but it’s definitely easy to get around 0.6 cents per point value.

  • Reasonable Redemption Value for IHG: 0.6 cents per point (unchanged)
  • Reasonable Redemption Value for those who cherry pick awards: 0.65 cents per point

Overvaluing vs. Undervaluing Points

A number of people have argued that I should include taxes in the hotel rates used for analyses like this one because leaving out taxes means undervaluing points (since free night awards do not incur most taxes).  However, there are many factors besides taxes that are equally important and also, for the sake of simplicity, are not included in my analyses.  My hope is that these factors roughly balance each other out…

Factors that cause us to undervalue points

  • We do not include hotel taxes in our analyses.  Most taxes are charged on paid stays but not award stays.
  • With hotel programs that offer 4th Night Free Awards (IHG, with certain credit cards), or 5th Night Free Awards (Hilton & Marriott), or award discounts (Wyndham), we do not consider the point savings in our analyses.
  • With hotel programs that offer free parking on award stays to top-tier elites (Hyatt), we do not factor this in.

Factors that cause us to overvalue points

  • We do not use discount rates (other than member rates) in our analyses.  In real-life, many people book hotels cheaper (and sometimes far cheaper) by using AAA rates, government & military rates, senior rates, etc.
  • We do not use hotel promotional rates.  Often, individual hotels have deals such as “Stay 2 Nights, Get 1 Night Free” which can greatly reduce the cost of a stay.
  • We do not use prepaid rates in our analyses.  Sometimes these rates are significantly lower than refundable rates.
  • We do not factor in rebates which can be earned from booking hotels through shopping portals.
  • We do not factor in points earned from paid stays.  These points can be thought of as a rebate on paid stays only.
  • We do not factor in extra points earned on paid stays for those with elite status.
  • We do not factor in hotel loyalty program promotions: Most promotions, but not all, only offer incentives for paid stays.  We often see promos offering bonus points, double or triple points, free night awards, etc.

Given the factors listed above, I think that including taxes in our analyses would lead us to over-value points.

Conclusion

Based on the latest analysis, I kept our IHG RRV the same: 0.6 cents per point.  The idea is that you have equal chance of getting that much value or more from your award stays.  Further, the latest percentile results show that those who cherry-pick awards (90th percentile) can expect to get around 0.65 cents per point.  That’s not very different from the median.  It shows that opportunities for getting far outsized value from IHG points have dwindled with time.  Sad.

For a complete list of Reasonable Redemption Values (and links to posts like this one), see: Reasonable Redemption Values (RRVs).

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Eric

I wonder if there might be more higher-value bookings if you considered random locations instead of three places in each of the big cities. I did quite a bit better than 0.65 at a Candlewood in Wyoming for this summer. That’s also an area where IHG (as well as Marriott and Hilton) shines in comparison to Hyatt – the closest Hyatt is about a 4.5 hour drive away.

Not saying the methodology is wrong at all, just that I suspect that’s where more outsized value is available now. (It’s a different program, but on the same trip I reserved a $400 Fairfield for 20k Bonvoy points)

[…] What Are IHG Points Worth:  Now that IHG has revamped their rewards program, the value of their points have increased.  Valuing points is subjective, as what appeals to one person won’t appeal to the other.  Yet this should give you a good idea of the value you can get from IHG points now. […]

WR2

Just wondering when you’ll ever see the light that when it comes to redemption: averages are meaningless. When you choose to use points, do you shoot for average? When choosing from options from a given destination, do you choose the average? No, you choose the best bang for the points. You selectively choose when to use points based on the destination, and the options at that destination. If there’s not a good points option then you pay cash, right? So then how in that context does averaging make any sense whatsoever?

This methodology just plays right into Marriotts hand of turning their program into a cashback rebate program (that is only redeemable at Marriotts, so much worse than cashback). It defeats the whole purpose of points and loyalty. Sorry, but I reject your entire premise of this, and your Marriott valuation claiming that the point values have gone up, which was the most ridiculous thing I’ve ever read on your blog.

Last edited 5 months ago by WR2
stvr

Did you read the post? They did percentiles. The percentiles showed there were no “bang for buck” redemptions. It’s all 0.6 cents up and down the food chain.

***

What I’m hearing is that you can buy at 0.5 cents per point and redeem at 0.6 cents per point. Combine with 4th night free and 10% rebate, and you can get four $100 hotel nights for $225. That’s a 43.75% discount just for being a “cool kid” in the know. I’ll high five Frequent Miler for that.

***

This reporting is great for Holiday Inns by airports in Texas. This is not so good for the Cayman Islands on Christmas. It is what it is.

WR2

Yes I did, did you not ready my reply? I’m saying programs that give you rewards as flat cash rebates are garbage, and you’re telling me that you like that. OK, so my question to you: why bother with loyalty then? You can earn cashback easily, and at better rates than Marriott or IHG is offering, no loyalty needed. Enjoy your holiday inn express in texas with powdered egg breakfast, is that the reward you want for being loyal? Whatever, you do you, you deserve what you settle for.

Cavedweller

I had every Hotel brand card up to 4 years ago then dumped them mostly worthless.If u can find a hotel that works go for it .My best airport hotels were in Nice,France like $100 or free 4 years ago.All the brands are there and they open up for their 4* Breakfasts at 5am with Super Service too. ..
Not everyone can spend $500k on their cards every year.

Enjoy ur Trips !!!

tassojunior

On the method, of course the normally 10% tax should be factored in as saved so 6.6 cents. I have the 10% rebate card so that would make mine 7.2. I also use 4th night free so that’s almost 10 cents. The flexibility of awards is another + variable.

But even with all the add-on benefits, I still barely pass 5 cents pre tax. The 10% sales tax saved is actually the biggest perk.

Last edited 5 months ago by tassojunior
LarryInNYC

Tax varies, sometimes a great deal, from 10% and is close to cancelled out by points earnings on paid stays.

nate

I find myself using IHG points at my go-to Philadelphia staycation hotel in the Winter, where paid rates are high but the point redemption value is a bargain (especially with the legacy 10% off IHG card). The Monaco in Philly can be as low as 29K points in the winter where rates are about $230/night. We’ve been there so often we usually get upgraded to an Independence Mall view corner spa room, which is a real treat. We live in Philly but always take a weekend away to act like tourists and get some cheesesteaks and enjoy the view.

Gene

@ Greg — I still cannot bring myself to value IHG points above 0.5 since they are available for purchase at that rate so frequently. They don’t sell points to lose money. I am thrilled to get 0.65 cpp, but sadly the days of booking the IC Willard for 70,000 points per night for the Presidential inauguration are likely over.